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Philadelphia Creates Land Bank for City to Sell and Purchase Vacant Property

by: Duane Morris LLP - Philadelphia Office

January 21, 2014

Previously published on January 16, 2014

On January 13, 2014, Philadelphia Mayor Michael Nutter signed into law Bill No. 130156-A, creating a municipal land bank for the city. With this law, Philadelphia became the largest U.S. city to adopt a land bank and joins more than 75 cities and towns nationwide that have established land bank programs to manage vacant properties.

Philadelphia's land bank legislation is authorized by Pennsylvania's Land Bank Act, P.L. 1239, No. 153, which allows local governments to establish public authorities to manage the purchase and sale of vacant municipally owned property. The goal of both the state and city laws is to decrease the number of vacant properties in order to reduce the detrimental social and economic impacts associated with vacant properties. Currently, around 40,000 parcels of land are vacant in Philadelphia, with the city owning close to 10,000 of those vacant properties.

The city's previous system of managing vacant properties was disjointed, creating burdens for prospective purchasers. Three separate city agencies owned and managed vacant city property, and each of these agencies had different rules for property sales.

The new law consolidates ownership and management of vacant properties into one authority—the land bank—and the same rules for sales will apply to all property. It is anticipated that the consolidation will streamline property sales, significantly lowering the burdens for prospective purchasers. Additionally, the land bank will be able to acquire tax-delinquent privately owned property more easily, which could increase the number of properties managed by the city. Currently, approximately 17,000 of the 30,000 privately owned vacant lots are tax delinquent.

Although management of vacant property will be consolidated under the new law, land sales will still involve a multi-step process. Before land can be sold, the land bank's Board of Directors must approve the sale; the City Council must approve a resolution; and the Vacant Property Review Committee, an interagency advisory panel, must also give its approval.

Mayor Nutter envisions the program to be fully operational by the end of this year. Before it goes into full effect, the land bank must be incorporated by the state, and the city must provide a budget appropriation for the land bank, appoint permanent members to the Board of Directors and transfer property to the land bank. The Board of Directors will have 11 members, and at least 4 of its members are required to be involved with nonprofit or advocacy organizations that deal with housing and community development issues.

The city anticipates that developers and other prospective purchasers will have a much easier time navigating the administrative process and acquiring city-owned property. Further, because the land bank will be able to acquire tax-delinquent property more easily, purchasers may have the opportunity to acquire larger blocks of land all at once without having to track down private owners or purchase at tax sales.

As for other benefits, the city also anticipates an increase in its tax revenue as formerly vacant land is developed, and city residents can look forward to enhanced safety as formerly vacant properties are developed.

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.